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December 6, 2004

Is Bush Becoming a Budget Hawk?

By

President Bush made tax relief the top domestic priority of his first term and has signaled that Social Security reform will take precedence during his second term. Yet, both are endangered by the same culprit: runaway spending.

The tax relief that has reduced the federal tax burden to $17,000 per household cannot be sustained if Washington continues spending $20,000 per household, a level not seen since World War II. The transition costs for Social Security reform become a tougher sell with every bloated spending bill that pushes the budget deficit further over $400 billion. Unless spending is peeled back, President Bush's domestic policy legacy will be higher taxes, budget deficits and stalled Social Security reform.

Taxpayers, therefore, should be encouraged by the President's insistence on keeping the omnibus spending bill within the budget resolution's spending limits. The resolution had capped 2005 discretionary appropriations at $821.9 billion, a 4.5% increase over last year. Predictably, Senate appropriators demanded to break the spending cap with an additional $8.1 billion. Although President Bush has traditionally taken a hands-off approach to key spending legislation (essentially handing Congress a blank check), his strong veto threat forced Congress to stay within the $821.9 billion cap.

President Bush also persuaded lawmakers to work within his budget priorities. While defense was hiked 7%, and homeland security and international programs each received 10% increases, domestic discretionary programs were nearly frozen. Following a 24% increase over the past three years, these domestic programs can clearly afford to level off for a few years, especially given the nation's higher national security priorities.

Of course, Congress did resort to some gimmicks. Housing programs were moved from fiscal years to calendar years in order to shorten their 2005 time period and "save" $1 billion.

Lawmakers also likely decided not to count $600 million in additional spending by classifying $300 million in routine home energy subsidies as "emergency," and by assuming (possibly without merit) that the crime-victims fund will suddenly earn enough fees to offset an extra $300 million in spending. And that's not even counting $14 billion in emergency hurricane spending that was not offset, and $3 billion in "emergency" farm assistance, despite the strong year for crops.

Real Discretionary Spending Increased 30 Percent between 2001 and 2004
Includes supplemental war spending
Source: Office of Management and Budget and The Heritage Foundation

Although a 4.5% increase represents progress over the recent double-digit increases, President Bush and Congress will have to go further in order to rein in spending. Families looking to cut costs would not freeze all expenditures equally; they would fully fund priorities like food, the mortgage payment, and insurance, while completely eliminating unaffordable luxuries such as vacations and expensive entertainment. Similarly, Washington should continue fully funding top priorities, such as defense, homeland security and a few domestic programs, and terminate unaffordable luxuries such as the $50-billion corporate welfare budget; $25 billion pork project budget; $100 billion (at least) in waste, fraud and abuse; and the hundreds of ineffective, outdated and unnecessary programs. Better that government perform a few functions well than a hundred functions poorly.

Instead of taking that approach, lawmakers again spent more on corporate welfare than on homeland security. (The House voted to eliminate only one corporate welfare program, the Advanced Technology Program, and then the Senate restored it.) The budget resolution included no requirements for committees to reduce waste, fraud and abuse. And lawmakers refused to take up legislation to create a government-waste commission that would operate like the successful military base-closing commissions of the late 1980s.

Worst of all, Congress once again made a mockery of fiscal responsibility with 11,000 pork projects that will cost taxpayers $25 billion this year. This includes money for the Baseball Hall of Fame ($450,000), the Grammy Foundation ($150,000), a mariachi music-school curriculum in Nevada ($25,000), relocating a single kitchen in Alaska ($2 million), and building a public swimming pool in Ottawa, Kan., ($100,000). These projects are often bought and sold by lobbyists, who make sure helpful lawmakers receive hefty campaign contributions. Under current projections, the money spent on pork projects over the next decade could otherwise finance one-quarter of the costs of Social Security reform.

That is the sort of trade-off President Bush and Congress must assess: pork, corporate welfare and hundreds of outdated, wasteful programs in areas Washington has no business meddling in, versus long-term tax relief and Social Security reform. President Bush has taken a solid stand with the 2005 omnibus bill. Now he must go much further.

Brian Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

First appeared in Human Events.

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